Impacts of Domestic Joint Ventures on Industrial Rates of Return: A Pooled Cross-Section Analysis, 1964-1975

empirical evidence on the relations among diversification, concentration, and profitability is inconclusive on whether any relation exists. In this note changes in diversification and concentration in U.S. manufacturing industries are examined over the period 1963-72, when a major expansion in diversification took place. The zero-order correlations between changes in concentration and in diversification either out of or into an industry tend to be positive and significant. The relation becomes insignificant when other variables (especially market growth) are controlled. However, a positive relation between changes in concentration and inbound diversification does remain significant among the less concentrated industries, where it seems more likely to reflect real economies enjoyed by diversifying companies than the exercise of market power.